Yelp! Customer reviews are coming

Review site to throw more challenges at merchants, hopes to save Sensis in the process.

By Nate Cochrane

30 November 2011 — 6:01am

As if local merchants didn't have enough to worry about with online and discount competition, today's launch of the Yelp recommendations site puts them on the receiving end of public reviews that could make or break them.

Yelp co-founder Jeremy Stoppelman in Sydney this week for the launch of the Australian version of the popular review site. Photo: Nate Cochrane

Into this raucous mix, US start up Yelp is launching a local chapter with Telstra directories arm Sensis and a promise to be "more democratic", broader and reliable than the homegrown competition, says co-founder Jeremy Stoppelman.

At the core of Yelp's unique value proposition is user-generated reviews often by reputable tastemakers ("Yelp Elite" in company parlance) to sway fellow consumers when it comes to buying from local businesses.

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This is a core difference from publishers' staff reviews, he says, because consumers share in a consensus opinion.

"A big part of our value is in the unique community we bring together and the content they create," Stoppelman says.

"Australians haven't yet taken up or been exposed to the situation where online reviews are their first port of call so Yelp is very interesting," Dawson says.

"It is important given the reality that competitors do things which are unkind that there are as good filters as possible to see whether people are genuine commenters.

"You wouldn't completely exclude other commenters but there would be more credence" given to those whose reputations were validated, elevating their opinions especially if they showed they experienced the item under discussion.

Stoppelman says the site filters "as much as possible [to] ensure that consumers are relying on trustworthy content".

He won't reveal Yelp's secret sauce, equating it to Google's search algorithm, but hints it's a machine-learning algorithm that combs comments to score their validity, surfaces the good ones and buries those falling foul. It also interfaces with Facebook Connect to ensure that reviews from your arguably more influential friends are prominent.

"We're essentially trying to prevent gaming," Stoppelman says. "As a local business owner you shouldn't control how you rank or be able to ask your friends to write reviews. If a business is providing a great product or great customer service, you will notice it over time."

Earlier this month, Telstra projected a nearly 20 per cent revenue fall next year for Sensis owing to Yellow Pages' poor patronage. Sensis CEO Bruce Akhurst says sites such as Yelp play an "increasingly important role ... in consumers' decision making". Yelp reviews will be published on Yellow Pages online and mobile in two weeks.

Stoppelman says Yelp was born in a discussion of how Craigslist diverted newspapers' "rivers of gold" and where the US Yellow Pages went wrong.

Now the company is leaning on Sensis' direct sales force to bootstrap it. Yelp makes money through national display and local classified ads but Stoppelman would not say if the partners share ad revenue.

Yelp hired a Melbourne community manager and capital city reviewers through Seek for $25 an hour to kickstart reviews.

Earlier this month, the loss-making startup filed for a US$US100 million float, valuing it up to US$2 billion. Investors who had sunk US$56 million since 2004 turned down a Google offer last year of US$500 million. The company made a loss of US$7 million on $US58 million revenue.

Mobile figures prominently in Yelp's plans for service expansion. It already powers the recommendation engine in Apple's Siri speech recognition for iPhone but Stoppelman can't say if it will extend to Australia: "Siri's completely under Apple's control".